Once you read the overview and get the big picture, you might also be interested in the top 529 college savings plans – where I provide an overview of the top 4 Morningstar gold rated college saving plans and things to consider when choosing a college savings plan.

Talk to Children About Going to College

Best thing for you to do as a parent is to talk to your children about going to college from a young age.

Do you use a 529 to save for your child’s college education? Do you talk to your children about the importance and value of education? Do you have open money conversations with your children on what college expenses you would pay for and what you expect them to pay by themselves?

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16 thoughts on “Saving for College Education”

I don’t have kids yet but I hope to one day. When I do I would love to help them pay for at least half of their college education. Student loans have been a huge drag for my wife and I, but I don’t think it’s all bad. It’s made me incredibly motivated to side hustle and I’m not sure I would have been as motivated if not for our student loan debt.

Sometimes the set backs we have in life get us really motivated to do above and beyond what we would normally do otherwise. In my case, the huge pile of credit card debt motivated me to not only get out of debt, but also take complete control of my finances. I am not sure if I would be where I am today, had it not been for the set back with credit card debt that I had early on in life.

My wife and I set up a 529 for my son as soon as he was born and we regularly put in contributions so we feel confident he will be able to go to the school of his choice.

One of the things that I’ve heard recently is that some people when they find out they are expecting actually create a 529 in their parents name and then transfer it to the child when they are born. There is supposedly a loophole that allows for this. Anyway for those people that plan to have children in the future this may be a good way to save extra $$$

That’s awesome, MSM! Yes, that is an excellent point you bring up. You can start the 529 plan in your name and transfer it to your child or your grand child. The sooner you start saving into a 529, the better it is.

We set up 529 plans for both of our kids when they were young. We’ve saved enough to help out, but certainly not even close to enough to cover four years. We use our state’s 529 plan (Iowa) because contributions are tax deductible (and it’s a good plan). The 529 is a great savings vehicle for college, in my opinion!

Yes, I agree with you, I am not aware of any savings vehicle that is as good as 529 when it comes to saving for college education. That is great that you have saved enough to help out. It is nice that you are taking advantage of the tax deductible provision in your state. Have you come up with a plan or discussed with your kids with regards to what expenses you may or may not be able to cover?

I believe speaking with your children about your college saving plans as early as possible is so important. It gives them a clear understanding of what help they can except. Talking to them about the overall cost and career options as they get close to college is important too. You want them to understand the ROI of the college degree.

Welcome back, Brian! Yes, those are all great points. The soon we have the conversation the better. As you pointed, we need to help children understand the ROI of the college degree before making the spending decision.

Inspired. I think anyone who saves for the children’s future deserves a medal. In the UK we don’t have plans specifically for further education, instead students borrow huge amounts throw student loans to get them through their years there, and end up spending years paying off the debt. My family have always been savers and my parents saved for both my sister and I so we had a pot of money in our late teens, which was very useful. Brilliant incentives here to save for your children

It is nice to hear that your parents were savers and also deposited some fine financial acumen into you. These days the student loans seem to as large as a home mortgage loan and it seems like forever for many people to pay them off. Parental help on college education certainly goes a long way in helping kids.

Making a plan for college is SO important. We have several steps in place for our kids to help them avoid student loan debt as much as possible. We’ve all heard the devastating student loan debt averages now – no excuses!

Thanks Laurie! It is nice to hear that you have taken good measures to save for college education. You are right about the “No Excuses” part – we need to plan ahead financially for college, and the sooner we do it, the better.

Hi Michael – I agree that investing in our kids’ future is important however I’ve had a slightly different approach to it.
As you mentioned, the 529 funding is restricted to education costs only and the investments inside the 529 depend on which state you are investing in. I’m really not a big fan of locking my money away in an account that earmarks it for specific purposes only.
The main reason for me is that I really want my kids to have an international higher education and the 529 plans will likely not be of any help. It’s also equity that could be invested for the parents in other ventures with better returns than stocks (let’s say real-estate rentals or starting a business).
I wrote a post on this a few weeks back to explain my line of thought.
Otherwise, I think the 529 plan is definitely a great option for many many people who didn’t think about investing before!

I had the same concerns that you did about locking the money into an account that earmarks for specific purposes.

Your point with regards to international education is very valid. However, after giving it a lot of thought, I decided to go ahead.

The worst case down side is you pull the money out for non educational purposes – in that case you get hit with taxes on capital gains and a 10% penalty on the capital gains. If the money is not fully used for kids, in the event of international education, it could be transferred to grand kids.

As you point out, real estate rentals is a good means to good returns if you know how to go about it.

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Hi, I am Michael! I have been writing on personal finance, investing, and frugal living since 2015. Dad, husband, father of two loving daughters, DIY investor, and a perpetual learner. Learn more about me.